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HKMA Revises SPM Modules on Corporate Governance and Risk Management

ByRegulatory News

October 06, 2017

HKMA published the revised supervisory policy manual (SPM) modules on corporate governance of locally incorporated authorized institutions (CG-1) and risk management framework (IC-1). Revisions to the modules were made to incorporate guidelines issued by BCBS and FSB as well as to update provisions for the board of locally incorporated authorized institutions and its committees.

Authorized institutions will be expected to implement the requirements set out in the revised modules with effect from January 01, 2018. The revised modules provide more elaborate guidance with respect to:

CG-1. The responsibilities of the board and senior management; the role of the chair and the appropriate composition of independent non-executive directors as members; and the governance issues in group structures, in the case where an authorized institution acts as the parent company or where the authorized institution is a regulatory subsidiary of an overseas-incorporated group.

IC-1. The key elements of an effective risk management framework, including delineation of the responsibilities of the Board, Risk Committee, and risk management function; the operation of a risk appetite framework and regular formulation of a risk appetite statement to facilitate oversight of risk-taking activities and risk management process; and the maintenance of effective systems and procedures to facilitate firm-wide risk measurement and monitoring.